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300 baht min wage: Not end of the world

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Business relocation won't happen because Thailand's neighbors all have higher costs in other areas, lack of skilled workforce & infrastructure, high interest rates. 

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Economics

Lots of work to go around

Impact of higher minimum wage seen as minimal and talk of companies moving to take advantage of cheap labour is overdone, says Manpower chief .
18/04/2012
Soonya Vanichkorn

While some critics say the new 300-baht daily minimum wage will backfire as companies relocate or fire workers to save costs, Manpower Group, one of the world's leading recruitment agencies, says the effects are not likely to be that dramatic

Unemployment is absolutely not going to be a problem for the foreseeable future, says Simon Matthews, ManpowerGroup's country manager for Thailand and the Middle East.

"Our clients [in Thailand] are still increasing production, continuing to invest, opening new facilities, and so on," he said. "At the moment, I don't see a major challenge on unemployment. Perhaps some of the smaller factories might have some challenges, but companies that employ 5,000 to 6,000 are still continuing to invest and increase production."

What will be interesting to watch, he says, is whether some companies might even raise their wages above the new minimum to differentiate between the better-skilled and non-skilled labour. As well, workers with more skills may start to look for wages that will distinguish them from those with no skills.

Say they were 10% above the old minimum wage, and now they are still kept at 10% above the new minimum wage to attract better people because they understand that skilled labour has value compared to unskilled labour.

Talk of businesses relocating to lower-wage provinces (the 300-baht wage applies in only seven provinces so far) may also be overdone, says Mr Matthews, as wages are not the sole determining factor for a business location. In any case, moving a big business is easier said than done as it would incur additional costs. Companies also have to consider return on investment, availability of a reliable local workforce, the cost of real estate, supply chains and logistics.

It's understandable that companies may say they are looking into moving," he said, noting that similar talk was prevalent immediately after the floods last year. "[But so far] we have not had any of our clients in Thailand who are looking to move into another province because of the minimum wage."

Mr Matthews also brushed aside concerns that companies in Thailand would relocate to neighbouring countries. From a labour and infrastructure point of view, Myanmar and Cambodia still trail Thailand by a big margin

"While there has been a lot of hype about Myanmar, the country has gone through 40 years without infrastructure or skills development, so for a company such as an electronics firm or an automotive firm from Thailand to actually move there, it would have to consider the risks and availability of skills needed," he said.

Thailand has the skills, the infrastructure, and a stable market. I don't really see companies switching off their lights and moving in the short term.

Cambodia offers 100% foreign ownership in most sectors, which makes it easier to do business, and only has a minimum wage in the garment industry

However, the country's smaller population, small skilled workforce and lack of middle management because of the conflict in the 1970s dent the country's attractiveness

"We are getting asked by companies [in Cambodia] to look into supplying them with expertise from Thailand because they have a shortage in the middle management level. [Although] they are going to improve, and they are still starting, and are not going to be a major competitor to thailand," Mr Matthews said

Vietnam, with a population at 90 million and wages still lower than Thailand's, would be the main competitor at the moment but the country also faces challenges, including double-digit interest rates.

Companies are not going to move for marginal improvements. There needs to be a big change in the cost structure, he said.

I still think that Thailand is a very competitive place to invest and to grow and we are still seeing that.

Manpower Thailand just obtained an international recruitment licence in January, enabling the company to send Thai workers overseas. Previously, the company tended to recruit expatriates or foreign nationals to work in Thailand.

The company is looking to export Thai skilled labour to the Middle East where demand is from countries such as Egypt, Saudi Arabia, Qatar, Bahrain, Dubai, Oman and Lebanon. It currently has about 100 requests for Thais to work in this market and aims to supply 200 to 300 people a year.

"We are not going into domestic household or construction labour but are looking at semi-skilled and skilled labour - particularly technicians, logistics and IT professionals and engineers to work in the oil and gas, and petrochemical industries," said Mr Matthews.

The hospitality industry will also be a focus because Thais are renowned for their expertise in this area.

The big markets for Thai semi-skilled and skilled labour are in Taiwan's electronics industry and the Middle East's oil and gas, petrochemical and hospitality industries.

There are currently around 400,000 Thais working overseas.

(Source: Bangkok Post, Economics, Lots of work to go around, Impact of higher minimum wage seen as minimal and talk of companies moving to take advantage of cheap labour is overdone, says Manpower chief , 18/04/2012, Soonya Vanichkorn, link

Employment Vocabulary

minimum wage -
the lowest wage that an employer is allowed to pay by law (See Wikipedia)

Manpower Group -
a recruitment agency with offices worldwide (See Wikipedia)

recruit - to get someone to work in a company or join an organisation จ้างงาน จัดหาเจ้าหน้าที่หรือบุคคลากร
recruitment - the process of finding people to work for a company or become a new member of an organisation การสรรหาใหม่ (See Wikipedia)
recruitment agency - a company that finds employees with certain qualifications for companies; same as "employment agency"
qualifications - experience, education and skills that are needed to do a job
licence - official permission from government to do a business or some activity ใบอนุญาต
international - between countries or in many countries ระหว่างประเทศ
international recruitment licence
expatriates - foreigners living a long time in a country away from their own country
recruit expatriates
recruit foreign nationals


employ - to have someone work or do a job for you and pay them for it ว่าจ้าง, จ้าง
employee - a worker working at a company
employer -
a company that provides a worker a job and pays wages or salary
employment - the work contract or agreement between an employee and an employer 
employment agency - a company that matches workers looking for work with companies looking for workers with certain skills and qualifications, employers looking for employees (employers give employment, employees receive employment (See Wikipedia)

unemployment - the number of people without a job (See Wikipedia) การตกงาน
fire - ไล่ออก(จากงาน) terminate or end employment
fire workers

skills - a type of work or task requiring special training and knowledge ทักษะ ความสามารถเฉพาะทาง (See Wikipedia)
skilled labour - work done by skilled and trained workers (See Wikipedia)
unskilled labour - work done by workers that need no special skills or training, often "manual labour"
manual labour -
"physical work done by people, most especially in contrast to that done by machines, and also to that done by working animals....done with the hands ... work done with any of the muscles and bones of the body"(See Wikipedia)
workforce -
1. all the workers working for a company; 2. all the workers working in a country's economy or an industry แรงงาน
skilled workforce
wages - the amount of money earned per hour or day by a worker ค่าจ้าง

middle management -
the people who are in charge of small groups of people and departments within a business organization but who are not involved in making important decisions that will affect the whole organization (See Wikipedia)

relocate
- move to another location ย้ายไปตั้งอีกที่หนึ่ง
relocating to lower-wage provinces
relocate to neighbouring countries

lots - much or many; large amounts
lots of work  
lots of work to go around - there is enough work for everyone who needs it
minimal - very small in amount น้อยที่สุด, น้อยมาก
advantage - a condition giving a greater chance of success ความได้เปรียบ

Lots of work to go around. Impact of higher minimum wage seen as minimal and talk of companies moving to take advantage of cheap labour is overdone, says Manpower chief .

critics - people who don't like something and who state their opinion about it นักวิจารณ์
backfire - to have the opposite effect or result than the one you intended ส่งผลตรงข้ามกับที่หวังไว้

dramatic
- a sudden, surprising or very noticeable change
not likely to be that dramatic
the effects are not likely to be that dramatic

While some critics say the new 300-baht daily minimum wage will backfire as companies relocate or fire workers to save costs, Manpower Group, one of the world's leading recruitment agencies, says the effects are not likely to be that dramatic

absolutely - completely
absolutely not going to be a problem - will not be a problem, for sure
for the foreseeable future - as far into the future as one can see (forecast, predict) and plan for

Unemployment is absolutely not going to be a problem for the foreseeable future, says Simon Matthews, ManpowerGroup's country manager for Thailand and the Middle East.

clients - (formal) customer ลูกค้า
facilities - the buildings, equipment and services provided for a particular purpose สิ่งอำนวยความสะดวก
moment - a very short period of time; a particular time or occasionชั่วขณะ, โอกาสสำคัญ
at the moment - now
challenge - something that needs a lot of skill, energy and determination to deal with or achieve สิ่งท้าทาย
challenges - difficult tasks that require great effort

"Our clients [in Thailand] are still increasing production, continuing to invest, opening new facilities, and so on," he said. "At the moment, I don't see a major challenge on unemployment. Perhaps some of the smaller factories might have some challenges, but companies that employ 5,000 to 6,000 are still continuing to invest and increase production."

differentiate - to create or see a difference between two things  
distinguish - able to see the difference between two things
attract - to cause someone to be interested in something ดึงดูดความสนใจ

What will be interesting to watch, he says, is whether some companies might even raise their wages above the new minimum to differentiate between the better-skilled and non-skilled labour. As well, workers with more skills may start to look for wages that will distinguish them from those with no skills. Say they were 10% above the old minimum wage, and now they are still kept at 10% above the new minimum wage to attract better people because they understand that skilled labour has value compared to unskilled labour.

sole - only เดี่ยวๆ
factor
- a fact or situation which influences the result of something ปัจจัย
determining factor
sole determining factor
not the sole determining factor
easier said than done - difficult to do (easy to talk about)
incur - having to pay an amount of money (examples: incur costs, incur expenses, incur liabilities, incur charges, incur a debt, incur an expense, incur a loss)
investment - taking your money and putting it into projects to make a profit or earn interest (buying stock shares, bonds, real estate)
availability - they exist and people can use them
reliable - works and operates as planned; (of things or people) able be trusted or believed because they work or behave well in the way you expect เชื่อถือได้, ไว้ใจได้
logistics - transporting and storing goods on the way from factory to consumer การขนส่งสินค้า (See Wikipedia and previous article)

Talk of businesses relocating to lower-wage provinces (the 300-baht wage applies in only seven provinces so far) may also be overdone, says Mr Matthews, as wages are not the sole determining factor for a business location. In any case, moving a big business is easier said than done as it would incur additional costs. Companies also have to consider return on investment, availability of a reliable local workforce, the cost of real estate, supply chains and logistics.

prevalent - very common แพร่หลาย พบได้บ่อยๆ Rise in hired killings feared Dark influence on rise amid political discord, but
similar talk was prevalent - there were a lot of people saying the same thing
immediately
- happening right after something else with no delay; right away ทันที
immediately after the floods - right after the floods, soon after the floods ended; not long after the floods

It's understandable that companies may say they are looking into moving," he said, noting that similar talk was prevalent immediately after the floods last year. "[But so far] we have not had any of our clients in Thailand who are looking to move into another province because of the minimum wage."

concerns - worries ความกังวล
brushed aside -
move something to the side (like sweeping with a broom)
brushed aside concerns -
said that worries or concerns (that people had) were not important
infrastructure
- the high-cost facilities that everyone in the economy shares (water, roads, electricity, trains) สาธารณูปโภค
trail - be behind in a race
margin - the amount by which a competition or election is won
trail by a big margin - far behind in a race (a long distance to catch up to person winning race)

Mr Matthews also brushed aside concerns that companies in Thailand would relocate to neighbouring countries. From a labour and infrastructure point of view, Myanmar and Cambodia still trail Thailand by a big margin

hype -
when people say a lot of good things about something (too much, too good; exaggerations)
development - the gradual growth, formation and improvement of something
skills development
firm
- a company บริษัท
stable - not changing frequently and not likely to suddenly become worse มั่นคง คงที
stable market - a market that is not changing all the time (so businessmen can predict the future and do business more easily)
garment - clothes
garment industry - the clothes making industry

"While there has been a lot of hype about Myanmar, the country has gone through 40 years without infrastructure or skills development, so for a company such as an electronics firm or an automotive firm from Thailand to actually move there, it would have to consider the risks and availability of skills needed," he said. Thailand has the skills, the infrastructure, and a stable market. I don't really see companies switching off their lights and moving in the short term. Cambodia offers 100% foreign ownership in most sectors, which makes it easier to do business, and only has a minimum wage in the garment industry

population - all the people who live in one country, area or place กลุ่มที่อาศัยอยู่ในบริเวณหนึ่ง
lack
- does not have ขาดแคลน
lack of middle management
conflict
- an angry disagreement between people or groups ความขัดแย้ง  ความไม่ลงรอยกัน
dent - hit and damage something
dent the country's attractiveness - hurt and lessen the country's attractiveness (make people want to invest there less)

However, the country's smaller population, small skilled workforce and lack of middle management because of the conflict in the 1970s dent the country's attractiveness

expertise
- special skills or knowledge from study or practical experience ความถนัด ความชำนาญเฉพาะทาง ทักษะความรู้, ความคิดเห็นของผู้เชี่ยวชาญ
shortage - when there is not enough of something การขาดแคลน
improve - to make better ทำให้ดีขึ้น
competitor - a person, team or company that is competing against others ผู้แข่งขัน, คู่แข่ง
double - to become twice as big, twice as much or twice as many เพิ่มเป็นสองเท่า
digit - any one of the ten numbers 0 to 9 ตัวเลข (0 ถึง 9)
interest - payments made for the use of another's money for a period of time
double-digit interest rates - interest rates 10% or higher

"We are getting asked by companies [in Cambodia] to look into supplying them with expertise from Thailand because they have a shortage in the middle management level. [Although] they are going to improve, and they are still starting, and are not going to be a major competitor to thailand," Mr Matthews said Vietnam, with a population at 90 million and wages still lower than Thailand's, would be the main competitor at the moment but the country also faces challenges, including double-digit interest rates.

marginal - small and not very important
marginal improvements - very small improvements
competitive - very good compared to others, so could win a competition
demand - the need and desire to buy goods and services by households and businesses

Companies are not going to move for marginal improvements. There needs to be a big change in the cost structure, he said. I still think that Thailand is a very competitive place to invest and to grow and we are still seeing that. Manpower Thailand just obtained an international recruitment licence in January, enabling the company to send Thai workers overseas. Previously, the company tended to recruit expatriates or foreign nationals to work in Thailand. The company is looking to export Thai skilled labour to the Middle East where demand is from countries such as Egypt, Saudi Arabia, Qatar, Bahrain, Dubai, Oman and Lebanon. It currently has about 100 requests for Thais to work in this market and aims to supply 200 to 300 people a year.

domestic - relating to a person's own country ภายในประเทศ
household - a group of people, often a family, who live together ครัวเรือน
construction - the work of building or making something, especially buildings, bridges, etc. การก่อสร้าง
IT professionals - skilled and highly trained computer workers
petrochemical
- chemicals made from oil ปิโตรเคมี
petrochemical industry
oil and gas industry
hospitality industry - the hotel, restaurant and tourism industry
focus - the main thing it is concerned with ให้ความสำคัญ
renowned - famous and admired for a special skill or achievement ที่มีชื่อเสียง

"We are not going into domestic household or construction labour but are looking at semi-skilled and skilled labour - particularly technicians, logistics and IT professionals and engineers to work in the oil and gas, and petrochemical industries," said Mr Matthews. The hospitality industry will also be a focus because Thais are renowned for their expertise in this area. The big markets for Thai semi-skilled and skilled labour are in Taiwan's electronics industry and the Middle East's oil and gas, petrochemical and hospitality industries. There are currently around 400,000 Thais working overseas.

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